The kids and the mortgage were a constant drain. And there wasn't much left once a bit more was set aside for retirement savings. So living on half an income doesn't seem so bad when the golden years finally come.
Effectively, says one of Canada's leading pension consultants, when you've had so little disposable income for so long, a modest retirement income feels just fine. And that, says Malcolm Hamilton, of Mercer Human Resource Consulting, is one of the strengths of Canada's pension system - "if strength is what you call it."
"If the objective is to maintain a standard of living in retirement, there are two ways to bring it about. You can try to elevate the post-retirement standard of living or you can try to depress the pre-retirement standard of living," Mr. Hamilton said yesterday. "It is the depressing of the pre-retirement standard of living that is the great success of the Canadian system."
Middle-income earners see their standard of living fall most when they buy a house and start a family - not down the road when they finally retire mortgage-free with grown children, he said.
"They stumble into retirement and they realize they're happy on 50 per cent of their income because they never had much of a standard of living," he said at Mercer's annual pension forecast breakfast in Toronto. "It's just much easier than they ever imaged it would be. And that's the base we're building from."
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Analysts examining why Canada's retirement system is ranked as one of the most successful in the world need to understand why 95 per cent of retired Canadians report being happy even though they are living on an average of 50 per cent of the income they earned when they were working, Mr. Hamilton said.
He urged leaders planning pension reform to target their efforts on middle-aged, middle-income workers in the private sector because they are the group worst-served by the current system. "We don't have a lot of money to throw at it, so government needs to hone in and address that problem," Mr. Hamilton said.
The problem area is not low-income workers earning less than $25,000 a year, he said, because they receive government pension benefits that equal their working incomes. Civil service workers have ample pensions, he said, and studies show most current retirees have adequate incomes.
But private-sector workers earning between $25,000 and $125,000 a year have the lowest retirement incomes as a proportion of pre-retirement income, averaging about 50 per cent in retirement, he said. He is concerned future retirees may not have the same incomes as current retirees.
Mr. Hamilton is particularly concerned about young people piling up far higher debts - especially bigger mortgages - than their parents.